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USDA ends base acres on leases

A new USDA regulation which unilaterally terminates base acres on federally-owned cropland has taken many of the nation's farmers completely by surprise. In many cases the land in question has been managed by farm families for generations, and includes at least one Mississippi farmer's home place.

USDA offered no explanation for the decision and did not cite any explicit authority for the action. But USDA evidently took advantage of a rule in the Food, Conservation and Energy Act of 2008 allowing owners of farmland to reduce their base acres. Noted Ted Serafini, congressional staffer for Sen. Blanche Lincoln, D-Ark., “The government took that rule and applied it to themselves.”

The provision (Section 1101, Base Acres) states, “The owner of a farm may reduce, at any time, the base acres for any covered commodity for the farm.”

The section also states that the reduction “shall be permanent and made in a manner prescribed by the secretary.”

A letter sent to FSA state and county offices from John Johnson, (Notice DCP 204) deputy administrator of farm programs for USDA's Farm Service Agency, stated, “land owned by federal agencies will have base acres terminated for the 2009 crop year unless that land is subject to a lease agreement which was executed before Dec. 23, 2008, and is in effect beyond the 2009 crop year.”

The National Cotton Council announced in January that the “NCC and other groups are working with Congress and the new administration in an effort to overturn this rule,” which effectively eliminates direct and counter-cyclical payments on the federally-owned lands.

A group of Mid-South farmers are also organizing against the rule. An organizing meeting for affected farmers was held Feb. 2 at the Marshall County Fairgrounds, just north of Holly Springs, Miss.

Wayburn Callicutt, who farms in Marshall and Lafayette counties in Mississippi, says about a third of his farmland is affected by the rule, including about 300 acres of cropland that his father purchased in the 1920s.

“I was born and raised on the land. It belonged to my father and was taken by eminent domain when the U.S. Army Corps of Engineers built Sardis Reservoir in the 1940s. But we were allowed to lease it back. That's what concerns me so much, losing the bases on the home place.”

Another piece of property Callicutt leases from the Corps in Sardis Reservoir “is a sizable place for the Hill country. It had about 200 acres of cropland on it and no bases when I rented it. I bit the bullet, planted it and went three years without a payment to build a base.

“Now they're going to take that one too. I feel like the base belongs more to me than it does the government. I took the risk and built the bases myself.”

Callicutt has a 10-year lease on the Sardis properties, with an option to renew after five years without a competitive bid. “I don't know what I'm going to do if they take the base off it. I'm not sure we can raise a crop without the subsidies. It's not going to be worth as much to me without the base.”

Callicutt says he'll try to renegotiate the option to reflect the decreased value from having farm payments removed. “I contacted the Corps of Engineers real estate division in Vicksburg, but they didn't know any more about it than I did.”

Callicutt said that 75 percent of the money paid in government leases goes back into the county. If income from those leases is reduced or eliminated, “it's going to impact the schools and the general funds in the counties.

“The land is not worth as much without the government payments, so we can't pay as much for it.

“There is a possibility we can get it stopped if there are enough numbers to protest it. It's not just affecting Mississippi. It's affecting all states and all federal lands, not just the Corps of Engineers land.”

There is also concern among farmers that land placed into FSA inventory for any reason, including foreclosure, could have those bases removed.

The FSA notice included three examples of how leases of federally-owned land would be handled under the rule:

Example 1(FSN 777) 50 base acres

Owner: Farm Service Agency

This farm is held in inventory by FSA and is not under lease.

Determination: Because this farm is federally-owned and does not meet the leasing exception, base acres on this farm shall be terminated immediately.

Example 2 (FSN 1302) 100 base acres

Owner: U.S. Army Corps of Engineers

A lease was executed with the Corps of Engineers on Jan. 1, 2008. The lease expired on Dec. 31, 2008. There are no renewal options.

Determination: This farm meets the leasing exception; however, base acres are terminated on Jan. 1, 2009, after the expiration date of the lease. If enrolled before the lease expires, (the direct and counter-cyclical contract) must be terminated because of a change in contract acreage.

Example 3 (FSN 1701) 75 base acres

Owner: U.S. Fish and Wildlife Service

A farmer executed a three-year lease containing two three-year renewal options with the U.S. Fish and Wildlife Service on Jan. 1, 2004. On Dec. 31, 2006, he exercised an option to renew the lease through Dec. 31, 2009.

Determination: This farm meets the leasing exception. Because the renewal option was exercised before Dec. 23, 2008, the base acres for this farm will be terminated on Jan. 1, 2010.